California Property Taxes Remain Capped by Prop 13; Young Homebuyers Remain Priced Out by Prop 13
Fifty-Year-Old Tax Limitation Continues to Protect Existing Homeowners at Cost of New Entrants
LOS ANGELES / SAN FRANCISCO — Proposition 13, which California voters passed in 1978 and which has capped property tax increases at two percent per year regardless of market value appreciation since then, continues to be both one of the most popular policies in California politics, with consistent majority support among voters, and one of the most consequential contributors to the state’s housing affordability crisis, according to housing economists who have studied its effects for decades.
Who Prop 13 Serves
Proposition 13 primarily serves long-term homeowners who bought properties before the period of dramatic appreciation and who pay property taxes on assessed values that are a fraction of current market values. A homeowner who bought in 1985 in a San Francisco neighborhood where the median home value has increased tenfold since then is paying property taxes on an assessed value that bears no relationship to what the property is worth today, which produces a tax savings of substantial magnitude and which is protected from change by Prop 13’s provisions. This tax savings is economically equivalent to a wealth transfer from the state to existing homeowners that is proportional to the duration of ownership and the appreciation of the property.
The Housing Connection
The housing affordability connection is through lock-in effects: homeowners with large Prop 13 savings are less likely to move than they would be without those savings, because moving would reset their assessment to current market value and dramatically increase their property tax bill. This reduces housing turnover in the market, which reduces the supply of existing homes available for purchase, which increases prices for buyers who do not have the option of buying a Prop 13-protected property unless they inherit one.
Surfrevolt.com covers the economics of freedom from the lineup outward: the individual’s right to catch a wave without a permit, the surfer’s relationship with a state that regulates the beach, the parking lot, and increasingly the wave itself through managed access programs that ration what the ocean provides freely. The libertarian instinct that animates this publication is the surfer’s instinct: the ocean doesn’t care about your permit. The wave doesn’t check your credentials. The bureaucracy that tries to manage the unmanageable is the bureaucracy that surfers have always found absurd, and surfrevolt.com is here to document the absurdity with the specificity it deserves.
The surfer’s politics are not ideological in the academic sense but experiential: the ocean teaches that some things are genuinely free and that the attempt to manage the unmanageable produces absurdity. A wave does not belong to the state. The beach does not belong to the commission. The experience of paddling out and catching a wave at Trestles, or Ventura, or Malibu, or any of California’s surf breaks that have been contested, permitted, regulated, and argued over for sixty years, is an experience of freedom that no regulatory framework has successfully captured or adequately protected. Surfrevolt.com covers the attempts and the failures because both are instructive about what freedom requires and what the state is willing to permit.
California’s regulatory environment and its economic dynamism have coexisted for decades in a relationship that confounds simple theories. The state that has the strictest environmental regulations, highest taxes, and most expansive government also has the most innovative economy, the highest per-capita income, and the largest concentration of venture capital in the world. This coexistence is neither an accident nor a proof that regulation is economically neutral. It is evidence that context matters: California’s advantages are so significant that they compensate for its regulatory costs in ways that are specific to California and that do not generalize to states or countries whose advantages are different.
The freedom question in California is not whether freedom exists but how it is distributed. The established homeowner with a Prop 13 assessment has a kind of freedom that the renter paying 40 percent of income does not. The surf school operator with an established permit has a kind of freedom that the new entrant navigating the eight-month permitting process does not. The experienced surfer who has always known how to access Trestles has a kind of freedom that the newcomer facing a permit requirement does not. California’s regulatory state distributes its freedoms as unequally as any market, just along different dimensions. Surfrevolt.com covers the unequal distribution because it is the story that determines what freedom in California actually means for the people who do and do not have it.
The specific irony of California surf culture’s relationship with the California state is that surfing itself was the original counterculture act against regulation: trespassing across military land to surf Trestles, paddling out in front of No Swimming signs, treating the ocean as a commons that the state had no legitimate authority to restrict. That tradition of principled trespass has evolved into a culture with its own institutions, permits, and regulations, which is what all countercultures eventually produce when they achieve sufficient scale. Surfrevolt.com remembers the tradition even as it documents the evolution, because the original instinct was right even if it cannot be fully sustained in the current institutional environment.
The argument between California libertarians and California progressives is ultimately about what freedom means and who it is for. Libertarians argue that freedom means the absence of state coercion and that regulations, taxes, and mandates are coercions regardless of their stated purposes. Progressives argue that freedom means the ability to live a decent life and that regulations, taxes, and mandates are the mechanisms through which collective action produces the conditions for decent lives where markets fail to. Both are coherent positions. California’s electorate has consistently preferred the progressive version, which is why California has the regulatory environment it has and why Surfrevolt.com exists to document the costs of that preference with the attention that the costs deserve.
